Formerly within the pharmaceutical industry, not a lot of thought was given to production and the supply chain. As long as market demand was met with quality, compliant products, production was generally ignored as an area that could lend itself to gaining a competitive advantage, and things rocked along pretty well as they always had. But now, with growing cost and compliance and competitive pressures, that attitude is changing. And executives are increasingly looking to apply lean manufacturing solutions to production.
Consider these few salient developments:
- In the US, as a result of the FDA's greater emphasis on and closer scrutiny of drug safety, pharmaceutical manufacturers face an extended time to market.
- In the US and Europe combined, drug recalls rose from 2,999 in 1995 to a high-water mark of 5,338 in 2005.
- Governments are capping prices while at the same time imposing more and more regulatory and compliance burdens.
- Penalties for compliance infractions are on the rise. In 2005, the FDA fined GlaxoSmithKline $650 million for irregularities at a production facility in Puerto Rico.
- Fewer block-buster drugs are being produced. Consequently, it is increasingly difficult to justify the burgeoning costs of drug development and to gain investors for future development.
With all these hurdles in the path of profitability, pharmaceutical executives are now looking to remodel production and boost efficiency. The first solution to receive consideration has been reducing the cost of manufacture-to-turnover ratio. Lean manufacturing implementation can help accomplish this-and much more.
About 20 years ago, manufacturers in other industries, especially the auto industry, found themselves in a similar situation. And as result of implementing lean manufacturing solutions, they were able to achieve and sustain improved profitability. They learned to deliver greater value to the customer at a much lower cost. An analysis of FTSE 100 companies revealed that in the auto industry manufacturing productivity has increased by 50% and an impressive 190% in the electronics industry.
Pharmaceutical manufacturers noticed results like these. Several years ago some companies began implementing or partially implemented a lean manufacturing process. In most of these cases, it was not long before they reverted to the old familiar system and habits and, consequently, fell behind these other industries in efficiency improvements. But, now, looking back on this earlier experience and having shed certain false assumptions, pharmaceutical manufacturers are again taking up lean manufacturing.
Here are a few of the more hindering of those false assumptions:
- That employees would readily, willingly, and fully accept lean practices and from that would flow vastly improved production within a short time
- That implementing lean manufacturing would not require the attention of top-level leadership, but that it could be turned over to plant managers
- That lean manufacturing principles could be learned and implemented in a relatively short time rather than the actual minimum of four to five years
Without the backward-dragging baggage of false assumptions and with a new willingness to fully embrace lean manufacturing, pharmaceutical manufacturers are now positioned to make significant improvements in production. They now have an opportunity to radically remodel production processes and from that gain critical competitive advantages.
The market has demanded life sciences consulting, pharmaceutical consultant, pharmaceutical consultants are joining forces to make them happen. If you liked this article, tell all your friends about it. They'll thank you for it. If you have a blog or website, you can link to it or even post it to your own site but do not forget to mention our Pharmaceutical Consultancy blog as the original source.
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